Friday, June 23, 2017

SK Telecom, South Korea's leading mobile operator by market share, is one of the big players to watch on the global stage for early 5G commercialisation. In fact, a race is on with local rivals KT and LG Uplus to have the first 5G service running in time for the 2018 Winter Olympics, which will be hosted in Pyeongchang, South Korea in February 2018 - only seven months away. Of course, 5G standards are not complete and won't be in time for the Winter Olympics, which means that network planners will be rushing to show off systems that have barely been tested. Sceptics will say that 5G demos at Pyeongchang are likely to be very limited in their footprint and perhaps only 4.5G rather than truly next gen. However, SK Telecom has a track record of being first with many networking technologies, extending back to its earliest days in CDMA.

Background

South Korea's mobile market is one of the most mature in the world. There are three dominant mobile operators: SK Telecom (approximately 49% share), KT and LG Uplus. Mobile penetration has exceeded 110% for years. The majority of users are on subscription-based plans, rather than prepaid, and churn is relatively light compared to other countries.

SK Telecom, part of the SK Group conglomerate (chaebol), was founded in 1984 and has a CDMA network architecture heritage. For its most recently reported fiscal quarter, SK Telecom posted revenue of KRW 4.234 trillion, operating income of KRW 410.5 billion, basically flat from a year earlier, and net income of KRW 583.5 billion, up 2.1 %YoY. As of the end of March 2017, SK Telecom had 21.65 million LTE subscribers, representing a 10.9% YoY growth, and taking up 72.6% of the company's total mobile subscriber base of 29.83 million. ARPU was KRW 34,927 ($31.04), down 2.9% YoY. SK Telecom also operates the Cyworld social network and virtual reality service as well as the Nate-on messaging application.

First in Carrier Aggregation

This week, SK Telecom announced the launch of LTE-A Pro service, which it described as the last stage of LTE evolution. The service footprint covers the main areas of six major cities: Seoul, Busan, Daegu, Gwangju, Daejeon and Ulsan. The initial LTE-A Pro service uses three-band/four-band carrier aggregation (CA) to deliver rates of up to 700 Mbit/s. When 4 x 4 MIMO is added, the service accelerates to 900 Mbit/s. SK Telecom plans to scale up LTE-A Pro further using five-band CA with 4 x 4 MIMO to achieve 1.2 Gbit/s peak rates. The first mobile device to support the LTE-A Pro service is Samsung’s Galaxy S8. An over-the-air firmware update will be needed to support the additional CA bands.

Peak speeds of 700 Mbit/s and up on a mobile phone are certainly impressive. Actually, SK Telecom has been delivering a 500 Mbit/s mobile service since June 2016 using 256QAM combined with tri-band CA. Four years ago, in June 2013, SK Telecom launched the first LTE-A service, which boasted download speeds of up to 150 Mbit/s, which is two times faster than its regular LTE service and 10 times faster than its 3G network. This was achieved using CA across two 10 MHz channels, along with the first Coordinated Multi Point (CoMP) implementation. Samsung's Galaxy S4 handset, which was the latest and greatest model in the summer of 2013, was the starring device for this milestone service launch as well.

Many world capitals today have yet to attain the 150 Mbit/s performance peaks offered in Seoul four years ago. But surprisingly, SK Telecom's LTE adoption rate amongst is 29.8 million mobile subscribers was only 72%, or 21.6 million users, as of March 2017. This means that even for a mobile operator with the most advanced network in the world, a significant percentage of users are laggards when it comes to updating to the latest service.

Recently, SK Telecom gained recognition for two other technology innovations: 5G mmWave Handover and a Green Scheduler with Lean Carrier algorithm. Both advances won Global Telecoms Business (GTB) Innovation Awards last month. The 5G mmWave handover technology, developed with Samsung, supports Gbit/s-level performance using multiple mmWave 5G base stations. The companies used the Ray Tracing method to calculate the optimal location of mmWave base stations. SK Telecom and Samsung also cited their work in 3D beamforming to resolve attenuation of radio signals in mmWave frequencies. The Green Scheduler with Lean Carrier technology, which was developed in partnership with Ericsson, enhances network energy efficiency while reducing signal interference.

With Ericsson, SK Telecom is also known to be working on a 5G connected car program. Earlier this year, SK Telecom, Ericsson and BMW Korea achieved a peak rate of 3.6 Gbit/s for a connected vehicle travelling at a speed of 170 km per hour. To pull this off, the three companies deployed the world largest mmWave 5G trial network using the 28 GHz band. Beamforming and beam tracking technologies were used to optimise the connection to the speeding car.

Leaping ahead in quantum technologies

To further illustrate its interest in pushing technological boundaries, SK Telecom signed separate research partnerships earlier this year with Nokia and Deutsche Telecom focused on quantum cryptography. The first partnership will match SK Telecom's Quantum Key Distribution System (QKD) with Nokia’s next-generation optical transport system. The first prototype was shown at Mobile World Congress in February.

Nokia and SK Telecom are also collaborating on a Quantum Random Number Generator (QRNG), which is seen a key technology for applying quantum cryptography technologies to IoT devices. SK Telecom has developed what it claims to be the world’s smallest 5 x 5 mm CMOS Image Sensor (CIS) based all-in-one, single silicon (ASIC) for providing non-deterministic true random numbers on demand from quantum-shot noise. The plan is to commercialise the technology to enable secure IoT.

SK Telecom's Quantum Alliance with Deutsche Telekom is more open. At this stage, the agreement aims to the channels of communications open between carriers and vendors when it comes to quantum technologies. The official statement from the company, by, Cha In-hyok, EVP and head of IoT business division, states:

“Committed to building a quantum-safe future, SK Telecom has been actively developing quantum cryptography technologies since 2011. SK Telecom believes that the co-establishment of the Quantum Alliance with Deutsche Telekom will bring us closer to realizing this goal, while also creating new valuable business opportunities in areas including quantum-safe communications, the Internet of Things and big data. It will work together to accelerate the growth of quantum-based cybersecurity technologies and its ecosystem".

Orange SA is perhaps the global carrier with operations in the most diverse geographies and cultures. From its headquarters in Paris, Orange (formerly France Telecom) now serves 265.162,000 subscribers worldwide with mobile, broadband, fixed telephony, TV and a range of advanced enterprise services. Part 1 covered the company's recent performance indicators, Part 2 discussed two growth segments for Orange: Africa and mobile money, Part 3 discussed the spirit of innovation and its growth in Spain, Part 4 covered Orange Business Services and the company's efforts in SDN and NFV. Part 5 of the series will look at the mobile operations, especially as Orange readies for 5G.

Quarterly and annual financial reports from Orange S.A. paint the picture of a mature mobile market, where ARPU remains flat despite increases in data traffic and continual capital expenditures. While this article has focused on areas of new investment, there has also been a very significant divestiture - the sale of its 50% stake in Everything Everywhere (EE) in the UK. In 2015, BT acquired EE from Orange and Deutsche Telekom for GBP 12.5 billion, giving it the leading mobile network in the UK with 31 million customers (including 24.5m direct mobile customers and 834,000 are fixed broadband customers). EE had previously operated the Orange and T-Mobile networks in the UK. At the time of the deal, EE was regarded by many as the UK's most advanced 4G network.

The joint venture was established in 2009 as a cost-sharing project of France Telecom (now Orange) and Deutsche Telekom. The operation also scored several notable MVNOs, including Virgin Mobile UK, The Co-operative Mobile and Asda Mobile. The sale its 50% stake in EE provided Orange with GBP 4.5 billion in cash and a 4% equity stake in BT. There has been speculation that Orange will use these proceeds to consolidate its position in Europe. Last year, Orange negotiated to buy Bouygues Telecom, the number three mobile operator in France, but these plans were scuttled.

The 5G rollout may be slower than in the U.S., Nordics, Japan and Korea

Unlike some other mobile network operators who are rushing to claim bragging rights as the first carrier to deploy 5G, Orange appears to be holding fast to previously published timelines to commercialise the next generation of mobile technology in 2020. This news emerged at Mobile World Congress earlier this year when major mobile operators and leading equipment vendors issued a call to accelerate the 5G New Radio (NR) standardisation schedule to enable commercial deployments based on the standard in 2019, one year ahead of schedule. The list of supporters notably did not include Orange.

Currently, Orange is conducting 5G demos and is planning large-scale field trials during 2018 and 2019. However, Orange was not an early mover for 4G, and here again the carrier has stated that it will no rush ahead with a pre-standard implementation that has not been fully vetted. In a press event following publication of its Q1 2017 results, company officials stated that capex plans for a 5G rollouts have not yet been budgeted as the standards are still evolving. 3GPP Release 15 is tentatively scheduled for phase 1 release in mid-2018; Release 16 specs should be out by the end of 2019. So far, Orange has announced 5G partnerships with Ericsson, Nokia and Huawei.

Related items

In January 2017, Ericsson and Orange exceeded 10 Gbit/s peak rates in 5G lab testing using beam tracking in France. In November 2015, Orange obtained two 5 MHz frequency blocks (10 MHz in total) in France at the end of an auction process for 700 MHz frequencies for a total sum of Euro 954 million. This will enable Orange to offer better quality of service, particularly inside buildings and in rural areas, and to prepare for the introduction of 5G technology, making Orange the only French operator to own 30 MHz in low frequencies.

In Poland, Orange Polska has also won auctions to acquire two frequency blocks on the 800 MHz band and three others on the 2,600 MHz band for the total amount of around Euro 700 million. In addition, the deployment of 4G+, which provides speeds which are twice as fast as 4G, is continuing in Europe.

Orange continues to deploy the 4G/4G+ networks in the European countries where it operates. For example, in Autumn 2015, Orange Spain commercially launched LTE-Advanced, which supports speeds of up to 336 Mbit/s. In Romania, where Orange is rolling out 4G+, the agreement signed with Telekom Romania in late 2015 for use of its fibre network in urban areas provides access to 20 million connectible homes, enabling the launch of convergent offers.

Nokia and Infracapital, the infrastructure arm of M&G Investments, announced they have been awarded a tender by the government of Poland for the design, construction and operation of advanced fibre networks to deliver broadband services to residents and schools in 12 currently under-served regions, mainly in the northern and central parts of the country.

The companies noted that they additionally expect to sign a further agreement covering a 13th region next month.

Under the agreement, Nokia will deploy networks based on GPON technology designed to deliver speeds of 100 Mbit/s to more than 400,000 homes and approximately 2,500 schools in the largely rural voivodships (provinces) of Lodzkie, Swietokrzyskie, Kujawsko-Pomorskie and Warminsko-Mazurskie. Capital expenditure for the project is expected to be approximately Euro300 million.

The networks deployed will be operated as wholesale, open access networks, with services to be marketed and delivered by retail service providers. The initiative was launched by Poland's Ministry of Digitalisation and is subsidised by grants from the EU under its EU Digital Agenda 2020 program, which has a goal of expanding fast broadband services with download speeds of at least 30 Mbit/s to all EU citizens, and at least 100 Mbit/s to 50% of citizens, by 2020.

The agreement specifies that from 2018 the under-served regions of Poland covered by the project will have access to a high-speed, resilient fibre network capable of supporting ultra-broadband services for schools, e-health and other digital services, as well as residential triple-play services.

The project will specifically feature Nokia's fibre access platform, the 7360 Intelligent Service Access Manager (ISAM) FX, the new Nokia 7362 ISAM DF small form factor fibre access platform and its 7368 ISAM ONT. Nokia will also provide the 5520 Access Management System for network management, and its Network Analyzer - Fiber operational support platform.

In addition to the broadband network infrastructure, Nokia will also provide professional and maintenance services. Nokia is responsible for the project management, planning, design and deployment of both the broadband and passive fibre network.

Infracapital is a major European infrastructure investor that is managed by M&G Investment Management, the European investment management arm of Prudential plc. Infracapital has to date raised over GBP 2.6 billion via four European infrastructure funds.

2. Offering manycore processors designed to enable high performance computing with low power consumption and low latency targeting embedded applications including autonomous vehicles and acceleration in data centres.

Has announced the completion of a new round of funding totalling $26 million that was led by new investor Safran, with participation from Asian investor, Pengpai, also a new investor, ACE Management, CEA Investissement, EUREKAP! Héléa Financière and INOCAP Gestion. Kalray has raised a total of over $65 million in capital and public funding from investors including Bpifrance.

Kalray stated that the new funding round will be used to accelerate the commercial exploitation of its existing solutions and to begin the development of the MPPA Coolidge, its 3rd generation of microprocessors, which is scheduled to be released in 2018. It also plans to expand its team, in particular its engineering team in Grenoble, and to strengthen its commercial network internationally. Leveraging a fabless model, Kalray has partnered with major chip company TSMC for production of its solution.

The company noted that since its spin-off from CEA in 2008 it has developed the massively parallel manycore architecture for its microprocessors that is protected by over 20 international patents. The MPPA technology is designed to increase processors' real-time processing abilities while maintaining low power consumption.

The company stated that it is expanding its international presence, and now has 65 employees, distributed across its home base in Grenoble, France and its North American operation in Los Altos, California. Kalray also has an office in Tokyo, Japan.

Level 3 Communications, which is in the process of being acquired by CenturyLink, announced that, with rising demand for agile, efficient network solutions due to the growth in connected devices and applications in the cloud, it is launching a new SD-WAN offering, which applies software-defined networking (SDN) technology to the network edge.

Level 3's SD-WAN provides customers with the ability to create secure private networks over a mix of public and private infrastructure, with site-to-site encryption, regardless of access or backbone method, including DSL, cable, LTE, Internet and MPLS. The SD-WAN solution also provides enterprises with centralised management and control, enabling traffic steering on an application-by-application basis or by access type and the connection of disparate sites across different backbone connections.

Level 3's new SD-WAN offering is designed to enable enterprise customers to:

1. Respond to changing business demands via rapid site deployment through zero-touch configuration.

France-based global telco Orange announced that it is reducing its stake in UK operator to BT Group through an agreement whereby it will sell one third of its current interest in BT via a private placement of approximately 133 million shares.

As part of the transaction, BT will place an order for GBP 200 million in the placement of BT shares, at the placement price, part of which will go to its employee share ownership trust. This order will be fully allocated by Orange.

The private placement will involve the approximately 133 million shares in BT held by Orange subsidiary Atlas Services Belgium, which represent around 1.33% of the share capital of BT.

In addition, there will be a simultaneous issue of approximately GBP 520 million of bonds due 2021, exchangeable into BT shares for a further one third of Orange's participation.

Following completion of the transactions, Orange will initially retain a 2.66% stake in BT. In the case of exercise in full of the exchange rights underlying the bonds, Orange would then retain a 1.33% stake in the company.

The exchangeable bonds, with a maturity of 4 years (unless subject to early redemption), are issued in GBP and will bear a coupon between 0% and 0.375% and will have negative interest rate after hedging in euros. The bonds will be offered at an issue price of between 100.5 and 100% of the principal amount, corresponding to an annual yield to maturity of between -0.125 % and 0.375 %.

The exchangeable bonds are expected to be issued in principal amounts of GBP 100,000 per bond and due to be redeemed at par at maturity. Holders of the exchangeable bonds may exercise their exchange right at any time from August 7, 2017 until the 55th calendar day before the maturity date of the bonds. Orange will be able to settle in cash, provide ordinary shares of BT, or a combination thereof.

Under the terms of the transaction, Orange will agree to a 90-day lock up for its remaining shareholding in BT, subject to waiver from the joint bookrunners and certain exceptions, notably the option to sell the BT shares to a strategic investor, where that investor agrees to be bound by a similar lock-up commitment.

Orange noted that the proceeds of these transactions will be used for the general corporate purposes.

Orange acquired the interest in BT in 2016 through BT's acquisition of UK operator EE, a 50/50 joint venture between Deutsche Telekom and Orange, through a transaction valued at approximately GBP 12.5 billion. Under the agreement, Orange received approximately GBP 3.4 billion in cash and a 4% stake in the combined BT-EE entity; Deutsche Telekom received a stake of 12% in BT, with a representative of Deutsche Telekom to be appointed to the BT board.

Ciena announced that Pittsburgh-based Ideal Integrations, a regional IT consulting company, has deployed its packet networking solutions to provide access to affordable Internet connectivity, as well as private connections between client sites, its cloud environment for hosting services and other public clouds.

In addition, local businesses can now access Ideal Integrations' new solution offering, IdealConnect, to transfer data and enable cost-effective and efficient collaboration.

Ideal Integrations focuses on delivering technology solutions tailored to each customer's requirements and budget. Utilising IdealConnect, local businesses are able to leverage a complete connectivity solution to the Internet, link customer locations and access the growing number of data centres in the Pittsburgh metro region.

For the project, Ideal Integrations has selected Ciena's 5142 and 5160 Service Aggregation Switches, which are designed to provide flexible, reliable and cost-effective metro-Ethernet connectivity. The Ciena solutions allow Ideal Integrations to provide customers with more reliable and higher speed Internet bandwidth and Ethernet connectivity. Specifically, customers now have access to 1 or 10 Gbit/s connectivity to efficiently support cloud-based applications for enterprises of any size.

Ideal Integrations is a computer network integration company that seeks to deliver solutions tailored to the requirements of individual customers. The company offers solutions including custom storage, virtualisation, network design, fibre connectivity, network maintenance and monitoring, disaster recovery, managed services and cloud services.

Benu Networks based in Billerica, Massachusetts, a provider of virtual network solutions designed to enable service providers to create and deliver next generation IP services, announced it has been issued two technology patents by the U.S. Patent Office.

The newly awarded patents relate to a method for creating scalable, centrally-managed WiFi using software defined networking (SDN) and a system and method of providing advanced services within a virtual CPE (vCPE) deployment. Both patents leverage SDN/NFV principles and are designed to help service providers reduce capex and opex, accelerate the launch of new services and enhance quality of experience (QoE) for customers.

The patents awarded to Benu Networks, both of which are based on the SDN approach of decoupling the control plane from the data plane to leverage cloud computing technology and to realise a large-scale, cloud networking deployment, are as follows:

1. U.S. patent No. 9,686,808, entitled Centrally Managed WiFi, pertains to WiFi aggregation using a flat Layer 2 architecture and enhanced fast mobility for WiFi devices between the radio nodes.

2. U.S. patent No. 9,585,186, entitled System and Method of Providing Advanced Services in a Virtual CPE Deployment, covers the provision of a centralised cloud based WiFi service.

The company noted that the new patents extend its intellectual property portfolio and, combined with its other awarded and pending patents, protect the attributes and capabilities of its Virtual Service Edge platform.

Benu Networks' Virtual Service Edge (VSE) platform is designed to integrate with service providers' operations and business systems to facilitate a comprehensive network solution that is fully virtualised and provides security, scalability and service agility. VSE enables cloud-based service deployment, dynamic service control and enhanced customer care.

* In April, Benu Networks announced the issuance by the U.S. Patent Office of a patent covering virtualised network cloud functionality within its VSE platform. The patent addresses the challenge for subscribers of a fragmented service experience that is dependent upon how devices connect to a service provider's network.

The patent enables a new virtualised network approach that includes single sign-on (SSO) capability, multi-access across WiFi and cellular technologies, and carrier aggregation across WiFi and cellular.

Enablence Technologies of Ottawa and Fremont, California, a supplier of optical components and subsystems for access, metro and long-haul markets, announced that under the previously announced private placement of common shares it has received commitments to purchase 8,542,857 common shares of the company, representing additional gross proceeds of approximately C$600,000, with the transaction expected to close by the end of June 2017.

Enablence stated that it also intends to complete its previously announced private placement financing of up to C$6 million principal amount of unsecured convertible debentures on or about June 30, 2017, subject to the approval of the TSX Venture Exchange. The company noted it has received indication of interest for approximately C$6 million principal amount of debentures.

The debentures will bear interest at a rate of 10% per annum, payable quarterly commencing September 30, 2017. The debentures will be convertible, at the option of the holder, into shares at a price of 8c per share representing a conversion rate of approximately 12,500 shares per C$1,000 principal amount of debentures.

Under the same terms as the financings, certain investors have advised that they will enter into debt settlement agreements with Enablence to settle outstanding cash advances totalling C$2 million through the issuance of 7,142,857 shares for an aggregate value of C$500,000, and the issuance of C$1.5 million principal amount of debentures, subject to the approval of the TSX Venture Exchange.

Enablence intends to use the proceeds from the financings as growth capital for current and future products and general corporate purposes. A portion of the funds will be used to fund a capex program to expand the production of the company's planar lightwave circuit (PLC) chips to satisfy both existing purchase orders and anticipated future demand for its metro market-focused 100 Gbit/s TxRx products.

In addition, some of the funding will be used to complete the development of the 100 Gbit/s TxRx product for the data centre market and for R&D activities relating to its next generation 200/400 Gbit/s products. Remaining funding will be used for general corporate purposes and working capital.

* Enablence announced in April that it expected to complete new financing of approximately C$6 million. The company also reported that it expected complete the execution of a LoI as announced December 2016 to raise funds of C$10 million to support growth via a non-brokered private placement of common shares at 7c per share for gross proceeds of approximately C$4 million, plus a non-brokered private placement of C$1,000 principal amount of unsecured convertible debentures for gross proceeds of up to C$2 million.